Saturday, 17 June 2017

A European Union (EU) law to abolish roaming charges for people using mobile phones abroad comes into force today [15 June 2017]. The new rules mean that citizens travelling within the EU will be able to call, text and browse the internet on mobile devices at the same price they pay at home.

I'm always wary about govt intervention in such matters, but in this instance, fair play to the EU, I can't see a downside.

We know that the price which people are willing to pay exceeds the actual cost of the satellites, or else mobile companies would not be prepared to pay such huge amounts of money for the radio spectrum. The surplus is 'unearned' income or rent. The question is, who gets the surplus - best is the government (as licence fees, quasi LVT); next best is the consumer (via capped prices) and worst is letting private companies collect it.

Roaming charges for using a mobile phone abroad will be abolished from December 2015 in proposals expected to be voted through the European parliament on Tuesday, but operators have warned that bills could rise domestically to pay for the change...

... a coalition of networks representing 45m consumers has warned that the legislation is so badly designed that the cost of domestic calls could rise to pay for it.

"There is a risk that domestic tariffs for European consumers will increase," according to the roaming coalition. "Roaming might not be subject to surcharges anymore, but the overall level of tariffs would increase, and non-roaming customers might effectively foot the bill for roaming customers."

Yeah right. We've covered that - prices are set by what consumer is willing to pay, not by costs. Domestic users are prepared to pay £x and not a penny more. They don't care what other people pay and for what.

The mobile companies have had years advance warning that this would happen, so if they are right, they would have been nudging up prices in anticipation. Have they?

Nope. Prices have been drifting downwards for years, see recent Ofcom report.

Disclaimer - I've no downer on mobile phones and mobile phone companies, they are brilliant. While they share a monopoly, between themselves they appear to be highly competitive. It's the landline people who take the piss.

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comments:

L, to a large extent the mobile phone companies were a cartel. They could all charge high prices for roaming because they all charged high prices for roaming. I suppose the amount of money involved wasn't large enough for any of them to break ranks. "The market" isn't very good at controlling cartels and monopolies.

P156. B said mobphoncos are a cartel. I do not agree with that - on the evidence that exists. A cartel is consequent upon collusion to overcharge or otherwise defraud the public. Banks yes. Mobile Phone Co's. No. See this table https://en.wikipedia.org/wiki/List_of_United_Kingdom_mobile_virtual_network_operators

However in some countries mobile is a monopoly - real or with one dominant provider. Mexico springs to mind. But even there there are many more than one carrier. See here https://en.wikipedia.org/wiki/Category:Mobile_phone_companies_of_Mexico

L, I don't think mobile phone companies are a cartel, except for when it comes to roaming charges. If they are not a cartel, the are acting like a cartel. No-one is breaking ranks because the market for roaming is not big enough to make it worthwhile.

I just renewed my deal and it's gone down from £9.80/month to £9. On top of this, my data went from 2.25GB to 3GB and 250 mins has gone to 1050. So in other words clearly no impact on the magic tap of roaming charges getting turned off.

"...it will fail" could be. You could see an industry split with low budget mobile phone sims only working domestically.

Roaming charges are not just a sur charge from the phone company for an extra service, they start from inter operator wholesale charges between telecom operators who are not partners. When call from abroad you are not connected to your mobile provider's network. You are connected to a different network and they charge your provider.